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The Swiss franc took the top spot this week as traders juggled risk against the backdrop of continued rising pandemic concerns, the Fed, and a regulatory crackdown in China.

Notable News & Economic Updates:

  • Asian shares skidded on Monday as concerns over tightening regulations upended Chinese equities
  • U.S., China still disagree on way forward after tense talks
  • Oil falls as coronavirus, slower China imports hit demand
  • South Korean economy grew by fastest pace in a decade at 0.7% in Q2
  • CDC to reverse indoor mask policy, saying fully vaccinated people should wear them indoors in Covid hot spots
  • China industrial profits rise 20% y/y in June
  • IMF warns that inflation could prove to be persistent and central banks may need to act
  • Coffee prices surge as unusual cold threatens Brazilian production
  • IMF raises growth forecasts for rich nations, dims outlook for developing world
  • Oil rises on U.S. fuel drawdowns despite surging coronavirus cases
  • Fed says economy continues to ‘strengthen,’ cites progress on bond taper goals
  • China stocks rally on Thursday as Beijing intensifies effort to calm market
  • CDC warns that delta variant is as contagious as chickenpox and may make people sicker than original Covid
  • S&P 500 closes Friday lower as Amazon shares slide, but notches sixth straight positive month

Intermarket Weekly Recap

Dollar, Gold, S&P 500, 10-yr Treasury Yield, Oil

Dollar, Gold, S&P 500, 10-yr Treasury Yield, Oil

Markets were in mostly in standby mode to start the week as trader awaited the highly anticipated monetary policy statement from the Federal Reserve.

There was a bit of a risk-off vibes, though, due to the crackdown in China on tech companies, and likely on continued pandemic concerns as the number of new covid-19 cases continues to accelerate around the world. With both themes as the main drivers ahead of the Fed, it looks like all asset classes had trouble staying in the green through the Wednesday session.

We finally get to the Fed event during the Wednesday U.S. trading session, and as expected, they held off on any policy changes despite citing the continued economic recovery and rising inflation conditions.

They did disappoint some though as their rhetoric on tapering wasn’t as strong as expected given the strength of inflation and the economy.  This is likely why we saw the U.S. dollar and U.S. Treasury yields dip after the event, which was likely the catalyst for gold and oils initial rally through Thursday.

Crypto was a volatility outlier at the start of the week as  Amazon bitcoin adoption rumors hit the wires on Monday, sparking a short squeeze in bitcoin, which pulled up the rest of the crypto space. It wasn’t too long that those same rumors were denied, leading to swift pullback at the end of the Monday session.

Based on price action, this didn’t sway the crypto bulls as this apparently was another buying opportunity, taking the space back to Monday highs and beyond. Bitcoin traded 12% over the Sunday open at the close of the U.S. session on Friday.

In the forex markets, the majors were almost as mixed as the rest of the financial space due to individual catalysts and drivers, but there was a reflection of the broad risk-off sentiment as the comdolls underperformed (with exception of the Canadian dollar) against the “lower risk” European currencies.

The biggest loser was the Australian Dollar (likely on Australian lockdown measures and expectations that the RBA may hold off on bond tapering), while the Swiss franc took the top spot being the most attractive “safe haven” for the week.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart

Overlay of USD Pairs: 1-Hour Forex Chart

  • U.S. New home sales dropped 6.6% in June vs. +3.4% forecast
  • Texas Manufacturing Activity was largely unchanged at 31.0
  • U.S. consumer confidence holds steady at a 17-month high in July
  • U.S. home prices broke records in May, according to S&P Case-Shiller
  • Richmond Manufacturing Index ticked higher in July to 27 from 26 in June
  • U.S. mortgage applications rise in latest week as rates decline
  • Fed holds rates near zero, says economy has gotten better even with pandemic worries
  • U.S. goods trade deficit widens on imports; inventories increase
  • U.S. Senate advances roughly $1 trillion bipartisan infrastructure bill
  • U.S. GDP rose 6.5% last quarter, well below expectations
  • U.S. economy contracted 19.2% during COVID-19 pandemic recession
  • Services boost U.S. consumer spending in June; inflation increases
  • Chicago Business Barometer Rose To 73.4 in July

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart

Overlay of GBP Pairs: 1-Hour Forex Chart

  • BoE’s Vlieghe says economy needs help for at least several quarters
  • UK Covid cases fall below 25,000, latest daily data shows
  • UK retail sales dip slightly in July after post-lockdown jump-CBI
  • Britain reports highest deaths from COVID-19 since March as Johnson urges caution
  • UK consumers get inflation relief as shop prices fall again – BRC
  • UK house prices fall in July as tax cut is scaled back – Nationwide
  • U.K. mortgage approvals fell to their lowest level in almost a year in June

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart

Overlay of EUR Pairs: 1-Hour Forex Chart

  • German business morale down on supply shortages, virus fears
  • ECB’s Holzmann says central bank’s new policy guidance was a ‘step too far’
  • German consumer morale steady heading into August- GfK
  • ECB strategy may mean temporary inflation overshoots: accounts
  • German unemployment falls in sign of continuing recovery
  • Germany Preliminary Inflation rate for July 2021: +3.8%
  • Germany’s economy expands less than expected in Q3
  • French Q2 preliminary GDP up 0.9% q/q, slightly above forecasts
  • Flash Euro area annual inflation up to 2.2%

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart

Overlay of CHF Pairs: 1-Hour Forex Chart

  • Swiss KOF Economic Barometer dips to 129.82 from 133.34

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart

Overlay of CAD Pairs: 1-Hour Forex Chart

  • Canada Annual CPI Decelerates to 3.1% in June
  • Central bank chief says Canadians should not ‘overreact’ to temporary inflation
  • Canadian Government extends pandemic recovery programs and business supports
  • Canada Industrial Product Price Index was 0.0% in June

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart

Overlay of NZD Pairs: 1-Hour Forex Chart

  • New Zealand Has NZ$261 million trade surplus in June
  • New Zealand ANZ business confidence index down from -0.6 to 3.8 in July

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart

Overlay of AUD Pairs: 1-Hour Forex Chart

  • Australian CPI blows hot in Q2, core inflation far cooler
  • Sydney lockdown extended by four weeks as Australia Covid-19 cases spike
  • RBA Deputy Governor gives speech on the FX Global Code
  • Australian import prices up 1.9% in Q2 2021
  • Australia central bank seen reversing taper decision as lockdowns hit economy: Reuters poll

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

  • Japan’s July factory activity grows at slowest pace in 5 months – PMI
  • Japan services PPI growth slows in June
  • BOJ must avoid premature tightening -opinions from July meet
  • Japan urges young people to get jabs and stay in amid Tokyo Covid surge